The International Organization of Securities Commissions (IOSCO) has published its Final Report with Policy Recommendations for Crypto and Digital Asset (CDA) Markets on 16 November 2023. Developed under the stewardship of the IOSCO Board’s Fintech Task Force (FTF), the report outlines 18 policy recommendations for the regulation of CDAs which aim to support greater consistency with respect to regulatory frameworks and oversight in IOSCO member jurisdictions, and to address concerns related to market integrity and investor protection arising from crypto-asset activities.
At the Singapore FinTech Festival (SFF) 2023, Jean-Paul Servais, Chair of IOSCO and Chairman of the Financial Services and Markets Authority (FSMA), announced the launch of the report in his opening address, which was followed by a panel discussion by representatives of the IOSCO FTF to unpack the policy recommendations.
Lim Tuang Lee, IOSCO FTF Chair and Head (Capital Markets Group), Monetary Authority of Singapore, highlighted five key themes of the CDA Policy Recommendations, which he termed as the five ‘Cs’.
- Minimise consumer harm from CDAs.
- Ensure accountable custody of consumer assets.
- Prevent conflicts of interest, such as for vertically-integrated crypto-asset service providers.
- Ensure sound conduct of business with measures to address cybersecurity risks and manage risk exposure to consumers.
- Promote cross-border cooperation to minimise regulatory arbitrage.
The panel also highlighted the comprehensive and inclusive collaborative process across more than 130 national regulators (as IOSCO member jurisdictions) in establishing the CDA Policy Recommendations, which considered differences in regulatory approaches when setting out principles-based and outcomes-focused guidelines that are actionable by the various jurisdictions.
Taking stock of the process, Matthew Long, Director, Payments and Digital Assets, Financial Conduct Authority (FCA) highlighted the importance of an inclusive consultation process gathering feedback from consumers, industry players, trade associations, and academia to provide fit-for-purpose guidance. Meanwhile, Valerie Szczepanik, Director, US Securities and Exchange Commission (SEC) FinHub, SEC, shared that a solid but flexible framework was necessary to reconcile the different regulatory approaches across jurisdictions, with basic ground-level principles of protecting investors and market integrity.
Moving forward, the CDA Policy Recommendations are set to complement a forthcoming set of policy recommendations for decentralised finance (DeFi) that will be finalised and published in December 2023. The next area of focus for IOSCO FTF is on adoption and implementation of these recommendations, where Jean-Paul Servais shared plans to develop a clear roadmap to support this for the next three years.
Access Partnership is attending SFF 2023 and tracking digital economy, financial technology (FinTech), and digital payments developments closely. If you would like to have a briefing and more information on these issues, please contact Royston Wah at [email protected] or Kar Joon Fan at [email protected].
